PHOTO: The Straits Times

The main question at an appeal court hearing yesterday that pitted the Government against an opposition-held town council, was how much power the judiciary has when a town council breaches the Town Councils Act.

At one end is the Ministry of National Development (MND), which hopes to overturn a High Court decision that there was no legal basis for the court to appoint independent accountants to the town council run by the Workers' Party (WP).

Opposing the move is the Aljunied-Hougang-Punggol East Town Council (AHPETC).

Its lawyer, Mr Peter Low, argued the judiciary is largely confined to issuing court orders under the Act, and does not have the power to appoint the accountants.

Countering the point, MND's counsel, Ms Aurill Kam from the Attorney-General's Chambers, said that even though the Act was passed in 1988 to give town councils much latitude in governance, it does not stop the Government from going to court if problems arise.

But, Chief Justice Sundaresh Menon noted, this did not surface in the parliamentary debates then.

He asked if this was "counter-intuitive", saying: "I'm troubled that I don't see anything in the debates that hint that the court is vested with the considerable power to, in effect, become a regulator of sorts."

He added: "You're saying it is open-ended, that once the application is made, the court has untrammelled and unlimited discretion as to the order it could make."

Replying, Ms Kam said the Act "strikes a balance" between giving latitude and providing safeguards.

At the end of the four-hour hearing, the Court of Appeal, with Chief Justice Menon and Judges of Appeal Chao Hick Tin and Andrew Phang, reserved judgment on the High Court decision that rejected MND's bid to get accountants appointed.

Justice Quentin Loh had in his decision in May criticised AHPETC for accounting and governance lapses. But he said the Act provides only for the Housing Board or residents - not the ministry - to take legal action against a town council that fails to perform its duties.

This issue arose again yesterday. Justice Chao asked if MND's argument - that it can take legal action - was a case of "the tail wagging the dog", because the minister is not mentioned in the provision relied on by the MND but was stated elsewhere in the Act.

Ms Kam argued that although the minister is mentioned "quite liberally" in the Act, this is only in places where he is the specific party to carry out an action. The provision, she said, is phrased broadly enough such that "not every single person needs to be named".

If the court's powers were just to make mandatory orders that the town council, for example, make timely transfers into its sinking fund, it would in effect be a "mere paper judgment that does not solve the underlying issue", she said.

Mr Low, AHPETC's lawyer, argued that the Act lets the court step in only to issue orders to compel town councils to follow the law when they are in breach.

Chief Justice Menon said: "And this is somehow going to make a difference? ... The town council already knows that the (law) exists."

But if the town council does not comply after a court order, Mr Low said, it would mean possible contempt of court proceedings.

The Chief Justice also noted that AHPETC's lack of means to make timely sinking fund transfers without government grants "hints towards some sort of insolvency".

"I'm troubled by your suggestion that in such a situation, there is nothing we can do."

This article was first published on August 4, 2015. Get a copy of The Straits Times or go to straitstimes.com for more stories.